What is an interchange fee?

Interchange fees are assessed by card networks and paid by merchants who accept credit card or debit card payments. This per-transaction fee covers the costs associated with processing payment card transactions.

Who pays an interchange fee?

The merchant is responsible for paying the interchange for a transaction. Interchange fees generally account for the majority of overall processing costs per transaction, aside from network assessment fees, which are payable to the applicable card network.

Why do banks assess interchange fees?

Interchange fees account for processing costs per credit or debit card transaction. Fees are set and assessed by card networks, then paid to issuers via your payment processor, sans a processing markup.

How much is an interchange fee?

Interchange fees vary among card brands. To illustrate, the average interchange rate for Visa card transactions is somewhere between 1.3% and 2.6%. For Mastercard, the average interchange is between 1.45% to 2.9%.

Who sets your interchange fee?

Banks and card networks set the fee schedules that are then passed on to processors. Processors refer to these charges as their âwholesale rate,â which is then passed on to the merchant, as an interchange fee.

How do processors calculate your interchange fee?

Processors break down their interchange rates into two approaches: blended and pass-through. They further delineate their fees into four main pricing scales: interchange-plus, flat-rate, tiered, or subscription.

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The Issuing Bank

Do you know the difference between an acquiring bank and an issuing bank? If not, don’t worry: you’re not alone. This article will explain the importance of the issuing bank, from what it is and what it does, to what it isn’t and why. We’ll also detail the leading card issuers in the US and how they’re working to protect both merchants and consumers from fraud.

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